5. Slim and Jim agreed to start a partnership business by bringing in required assets. Their profit and loss sharing ratios were agreed at 4:3:3. Other provisions were as follows:

1. Slim was to contribute cash of $28,000 and furniture displays worth $37,000 which had a fair market value of $40,000.
2. Jim was to invest $40,000 in cash and $30,000 worth of equipment. Related to the equipment was a note payable of $10,000 which the partnership firm agreed to assume as a liability of the firm.

Required:

Show necessary journal entries to record the investment of the partners.

6. Larry, Garry and Barry are partners in a firm sharing profits and losses in the ratio of 5:3:2. The following information is given to you for the year ending December 31, 2020.

Net sales revenue $900,000

Cost of Goods sold 300,000

Administrative expenses 200,000

Marketing expenses 100,000

Additional information is as follows:

a. Partners capitals at the beginning of the year amounted to $60,000; $40,000 and $30,000 for Larry, Garry and Barry respectively.

b. Larry and Barry are to receive a salary of $1,200 per month and Garry is to receive a bonus of 2% on sales.

c. The partners are to receive an interest on their beginning capital balances @ 8% per annum.

d. The partners withdrew $1,000 per month.

Required:

A. Show the distribution of income between the partners for the year.

B. Determine the capital account balance of the partners at the end of the year.